EUR/USD: The market is in the process of rolling over and carving out what could be the right shoulder of a major head & shoulders top. Key neckline support comes in by 1.3695, and a break below will confirm reversal prospects and potentially open a material decline back towards a measured move objective by the 1.3300 area which also loosely coincides with the 50-Day SMA. The 10-Day SMA is also in the process of crossing the 20-Day SMA (bearish) for the first time since early September when the market was trading in the 1.2700’s. For now, look for any intraday rallies to be well capped ahead of 1.4000.
USD/JPY: Setbacks have stalled out for now by 80.40 and just shy of the record lows from 1995 at 79.75. At this point, it is way too early to call for any material base, however, daily studies have turned up from oversold with Tuesday’s bullish reversal day suggesting that the market wants to head higher, at least over the short-term. Next key resistance comes in by 82.00, and a break and close above this level will be required to officially relieve immediate downside pressures and accelerate gains. Any intraday setbacks should be well supported ahead of 81.00.
GBP/USD: As per our commentary in Tuesday’s analysis, rallies were indeed very well capped by 1.5900 and this keeps our bearish bias intact. Look for a lower top by Tuesday’s 1.5900 highs ahead of the next drop back below the vey well supported 50-Day SMA by 1.5650 and towards 1.5300 further down. Ultimately, only a close back above 1.6000 would negate outlook and give reason for pause.
USD/CHF: With daily studies finally crossing up from oversold and the market managing to close back above the 20-Day SMA for the first time since August, we are encouraged with the prospects for the formation of a major base by the recently established record lows at 0.9460. From here, look for any intraday setbacks to be well supported on dips towards 0.9700, with the market now eying a move towards next key resistance by 1.0000 over the coming sessions. Last week’s inability to extend declines to yet another record low below 0.9460, set up a strong bullish reversal week to end a sequence of 9 consecutive weekly lower highs. This further strengthens our constructive outlook and over the medium and longer-term we see significant upside risk. The market is now looking to establish back above the 50-Day SMA for the first time since mid-June.
A UK clearer was seen buying through triggers and corporate demand was also seen in EUR/USD an ACB provided supply and semi-official sales were noted. Middle Eastern names seen on the bid in Cable all morning with real money accounts appearing on the offer. Model names sold large quantities in GBP/CHF and GPB/AUD early on.